GE Aerospace (NYSE: GE)

GE Aerospace’s Q2 2025 financial performance was exceptional across all key metrics. Total revenue grew 21% year-over-year to $11.0 billion, with adjusted revenue increasing 23% to $10.2 billion. This strong growth was primarily driven by robust performance in the Commercial Engines & Services segment, which saw 30% revenue growth, and continued strength in Defense & Propulsion Technologies with 7% growth.

Operating profit increased 23% to $2.3 billion, demonstrating the company’s operational leverage and efficiency improvements through the FLIGHT DECK initiative. Operating margin remained strong at 23.0%, only slightly down from 23.1% in the prior year, showing the company’s ability to maintain profitability while scaling operations and investing in growth.

Net income performance was particularly impressive, with continuing operations net income increasing 65% to $2.0 billion. This translated to continuing EPS of $1.87, a 56% increase from $1.20 in Q2 2024. On an adjusted basis, EPS grew 38% to $1.66, exceeding expectations and demonstrating strong earnings power.

Free cash flow nearly doubled to $2.1 billion, representing a 92% increase from $1.1 billion in Q2 2024. This exceptional cash flow performance reflects the company’s strong operating performance, working capital management, and the capital-efficient nature of the aerospace services business. The improvement in cash flow conversion demonstrates GE Aerospace’s ability to translate earnings into cash effectively.

For the six-month period, revenue increased 16% to $21.0 billion, with operating profit up 30% to $4.5 billion and free cash flow growing 28% to $3.5 billion, showing consistent strong performance throughout the first half of 2025.

Commercial Engines & Services (CES) delivered outstanding performance with revenue of $8.0 billion, representing 30% growth year-over-year. This strong performance was driven by services revenue growing 29%, supported by increased spare parts demand and internal shop visit revenue. Equipment revenue grew an impressive 35%, with higher unit volumes and favorable pricing more than offsetting customer mix effects.

CES operating profit increased 33% to $2.2 billion, with operating margin expanding 50 basis points to 27.9%. This margin expansion occurred despite significant scale-up in operations, demonstrating the company’s ability to maintain pricing discipline while meeting increased demand. The profit growth was driven by services volume expansion, productivity improvements through FLIGHT DECK, and favorable pricing, which more than offset investments and inflationary pressures.

Defense & Propulsion Technologies (DPT) showed solid performance with revenue of $2.6 billion, up 7% year-over-year. Orders in the segment increased 24% to $2.9 billion, indicating strong future revenue visibility. Defense & Systems revenue grew 6% driven by higher unit volumes and pricing improvements, while Propulsion & Additive Technologies revenue grew 9% with growth across all business lines.

DPT operating profit increased 5% to $362 million, though operating margin declined 20 basis points to 14.1%. This margin compression was primarily due to ongoing self-funding investments in future capabilities and inflationary pressures. Despite the margin pressure, the segment demonstrated resilience with volume growth, productivity improvements, and pricing discipline helping to offset cost pressures.

Looking ahead, CES expects to deliver high-teens revenue growth in 2025 with $8.0-8.2 billion of operating profit. DPT continues to expect mid-single-digit to high-single-digit revenue growth with $1.1-1.3 billion of operating profit. Both segments are well-positioned for continued growth through 2028, with CES benefiting from increased services demand and DPT from higher defense spending and improved mix.

GE Aerospace’s FLIGHT DECK operational excellence program continued to drive significant improvements across the organization, contributing materially to the strong Q2 2025 performance:

Supply Chain Performance

• Supplier Improvements: Material input at priority supplier sites improved 10% sequentially in Q2, with suppliers delivering more than 95% of committed volume
• Capacity Expansion: Removal of waste in operations and expanded capacity helped increase total engine units by 45% year-over-year
• Quality Focus: Continued emphasis on safety, quality, delivery, and cost—always in that order—as the foundation of operational improvements

Production and Delivery Achievements

• Commercial Engines & Services delivered 29% growth in services revenue
• Total engine units increased 45%, demonstrating improved manufacturing efficiency
• Improved turnaround times in services businesses contributing to customer satisfaction
• Enhanced operational productivity helping to offset inflationary pressures

The FLIGHT DECK initiative has become central to GE Aerospace’s competitive advantage, providing systematic improvements in operational performance while maintaining the company’s industry-leading safety and quality standards. The program’s focus on continuous improvement and waste elimination has enabled the company to scale operations effectively to meet growing demand.

CEO H. Lawrence Culp, Jr. emphasized the importance of these operational improvements: “Our team is using FLIGHT DECK to improve safety, quality, delivery and cost—always in that order—as we strive to provide unrivaled customer service and deliver on our roughly $175 billion backlog.”

GE Aerospace continued to execute on key strategic initiatives that position the company for long-term growth and technological leadership:

Major Commercial Wins

• Qatar Airways Deal: Secured commitment for more than 400 GE9X and GEnx engines, representing the largest widebody engine deal in GE Aerospace history
• British Airways Partnership: Agreement with IAG for 32 Boeing 787 aircraft powered by GEnx engines for British Airways
• Backlog Strength: Maintained strong order book of approximately $175 billion, providing long-term revenue visibility

Technology Development Programs

• CFM RISE Program: Completed more than 350 program tests with early focus on durability, including advancing new high-pressure turbine blade cooling technology and testing full-size Open Fan blades
• Hypersonics Infrastructure: Announced significant investments to upgrade hypersonics test infrastructure across U.S. sites, including wind tunnels and high-temperature materials rigs
• Next-Generation Technologies: Continued investment in advanced materials, digital technologies, and sustainable aviation solutions

Sustainability and Future Aviation

The CFM RISE program represents a critical investment in the future of aviation, with the potential to reduce fuel consumption and CO2 emissions by up to 20% compared to today’s best-in-class engines. The program’s progress in durability testing and Open Fan blade development demonstrates GE Aerospace’s commitment to sustainable aviation technologies.

The company’s investments in hypersonics test infrastructure position it at the forefront of next-generation defense and space technologies, supporting both commercial and defense growth opportunities in emerging high-speed flight applications.

Based on the strong Q2 2025 performance and improved operational outlook, GE Aerospace raised both its 2025 guidance and 2028 outlook across all key metrics:

2025 guidance increases reflect the company’s confidence in maintaining strong momentum. Operating profit guidance was raised to $8.2-8.5 billion from the previous $7.8-8.2 billion range, representing an increase of $1 billion at the midpoint. Adjusted EPS guidance was raised to $5.60-5.80 from $5.10-5.45, reflecting both operational improvements and the company’s share repurchase program.

The 2028 outlook was substantially increased, with operating profit now expected to reach approximately $11.5 billion, up $1.5 billion from the prior $10 billion target. Free cash flow is expected to reach approximately $8.5 billion in 2028, also up $1.5 billion from previous expectations. These increases reflect the robust commercial services outlook and operational performance improvements.

The company also announced plans to increase capital returns to shareholders by 20% from 2024 to 2026, totaling approximately $24 billion. Beyond 2026, GE Aerospace expects to sustainably return at least 70% of free cash flow through dividends and share buybacks, providing shareholders with significant cash returns.

Revenue growth expectations were also raised, with 2025 adjusted revenue growth now expected in the mid-teens range compared to the previous low-double-digit expectation. The 2028 outlook now projects double-digit CAGR from 2024-2028, up from the previous high-single-digit CAGR expectation for 2025-2028.